Capital Cities in Interurban Competition: Local Autonomy

View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Bern Open Repository and Information System (BORIS) Capital Cities in Interurban Competition: Local Autonomy, Urban Governance, and Locational Policy-Making David Kaufmann University of Bern, KPM Center for Public Management, Schanzeneckstrasse 1, 3001 Bern, Switzerland, +41 (0)31 631 5996, [email protected] Published in Urban Affairs Review, https://doi.org/10.1177/1078087418809939 Abstract Capital cities are government cities that tend to lack a competitive political economy. Especially secondary capital cities – defined as capitals that are not the primary economic centers of their nation states – are pressured to increase their economic competitiveness in today’s globalized interurban competition by formulating locational policies. This article compares the locational policies agendas of Bern, Ottawa, The Hague, and Washington, D.C. The comparison reveals that (1) secondary capital cities tend to formulate development-oriented locational policies agendas, (2) local tax autonomy best explains the variance in locational policies agendas, and (3) secondary capital cities possess urban governance arrangements where public actors dominate and where developers are the only relevant private actors. The challenge for secondary capital cities is to formulate locational policies that enable them to position themselves as government cities, as well as business cities, while not solely relying on the development of their physical infrastructure. Introduction Economic globalization contests the political and symbolic centrality of capital cities. The ascendance of global cities, the rise of transnational institutions, and the increasing concentration of the knowledge economy in a few dominant metropolitan centers challenge the traditionally importance of capital cities (Friedmann 1986; Sassen 1991). Contemporary capitalism pressures capital cities to enter into globalized interurban competition like any other city. It is, however, uncertain whether and how cities can influence their economic destiny in an international market economy (Savitch and Kantor 2002). Secondary capital cities (SCCs), defined as capitals that are not the primary economic centers of their nation states, are especially challenged by these pressures because these cities lack a competitive political economy (Kaufmann 2018). The political economy of SCCs differs from political economies of other types of cities because SCCs have more complicated government-market interactions, and they are subject to a greater influence from the national government on the local economy, the local labor market, and local land markets (Campbell 2000). The specific political economy of SCCs is produced by “complex relationships between government, private-sector, and third-sector actors [that] form a distinctive economic system, which is spatially manifested through their interactions, which, in turn, produce information and knowledge” (Mayer et al. 2018, p. 4). As a consequence, the regional economy of SCCs possesses strong clusters of firms in highly regulated and knowledge-intensive sectors, it lacks strong industrial sectors and it is depend on public procurement (Kaufmann 2018; Mayer et al. 2018). And finally, capital cities are places that represent national identity, where a nation’s memory and symbols are staged and thus they have to maintain a modern and representative infrastructure (Cochrane 2006). The legacy as ‘government cities’ constitutes the unique competitiveness challenges for SCCs. Therefore, SCCs enter globalized interurban competition with a political economy that is configured 1 differently than the political economies of global economic powerhouses, such as New York, London, or Tokyo, or overachievers in contemporary capitalism, such as the Silicon Valley, Amsterdam, or Singapore. It is within these settings that SCCs seek ways to position themselves in interurban competition, and they do this by formulating locational policies that aim to increase their economic competitiveness (Kaufmann 2018). Nation states deliberately chose secondary cities as capitals in order to exert a balance between different regions or cities within a nation state with the idea that they should refrain from developing into economic powerhouses. In some instances, SCCs were chosen to avoid the concentration of economic and political powers and to serve as independent and alternative sites to traditional commercial centers (Gottmann 1977; Mayer et al. 2016; Slack and Chattopadhyay 2009). In other cases, formerly colonized nations sought to break with their colonial ties by building a new capital city as a symbol of their independence (Moser 2010; Rossmann 2017). SCCs can be found on every continent. Famous examples of SCCs exist in Africa (e.g. Pretoria, Abuja), Asia (e.g. Jerusalem, Islamabad), Oceania (e.g. Wellington, Canberra), Europe (e.g. Berlin, The Hague), North America (e.g. Washington, D.C., Ottawa) and South America (e.g. Brasilia, Sucre). National governments may choose to establish new capital cities from scratch or to relocate capital cities to secondary cities. Examples include the relocation of the Brazilian capital from Rio de Janeiro to Brasilia in 1960, the relocation of the Nigerian capital from Lagos to Abuja in 1991, and the construction of the new Malaysian administrative capital of Putrajaya, which began in 1995. Relocating a capital city is a normal process in the political life of empires, kingdoms, and nations with regard to time and space: around 40 % of all nation states have discussed relocating their capital city (Rossmann 2017). Given that the global system of capital cities is dynamic, it is likely that other SCCs will be established in the future and that these new SCCs will face the same competitiveness challenge that current SCCs do. 2 The political science and public administration literature perceive SCCs as government cities and it analyzes them in relation to the (federal) nation state (e.g. Harris 1995; Rowat 1968, 1973) or it focuses on how capital cities in federations are organized and financed (Slack and Chattopadhyay 2009). This article perceives SCCs as economic actors that engage in globalized interurban competition and thus it uncouples SCCs, to a certain degree, from the analytical fixation on the nation-state. In what follows, I draw on the literature on multilevel governance, local autonomy, urban politics, and locational policies in order to establish the theoretical framework for this article. In individual case studies, I study variations in the locational policies agendas of four different SCCs, namely Bern, Ottawa, The Hague, and Washington, D.C. The cross-case comparison finds that SCCs tend to formulate locational policies agendas that favor the physical development of their cities. It also reveals that local tax autonomy greatly influences the formulation of locational policies because it alters the opportunity structure through which local governments raise funds. I discuss the generalizability of these findings and I conclude by briefly recommending strategies that may counteract the negative implications of SCCs’ locational policies agendas. A Multilevel Governance Framework for Studying Urban Policies The multilevel governance (MLG) concept, adapted to the urban perspective, provides the theoretical framework behind this article (summarized in Table 1). Two dimensions of MLG serve as the explanatory factors to analyze the locational policies agendas in SCCs. 3 Table 1: Theoretical framework Overarching Multilevel Governance framework Explanatory factor 1 Explanatory factor 2 Phenomena to be explained: Concepts Vertical dimension: Local dimension: Urban Locational policies agendas Local autonomy governance arrangements Operationalization - Governing structure - Social production - Tax maximization of concepts - Local tax autonomy model - Development and public funds The MLG concept theorizes the decision-making of multiple intervening actors that operate on multiple scales without a structuring authority (Hooghe and Marks 2003). Horak and Young (2012), among others, adapt the MLG concept to the urban perspective. They propose two MLG dimensions: The vertical dimension analyzes the interaction between governments at multiple levels in policy-making, whereas the local dimension examines the involvement of non- governmental actors in the policy-making process (Young 2012, pp. 5–6). Consequently, Horak (2012, p. 339) defines MLG as “a mode of policy making that involves complex interactions among multiple levels of government and social forces.” Both dimensions are crucial for a comparative analysis of urban policy in general (e.g. Gurr and King 1987; Kantor and Savitch 2005; Sellers 2005), and these dimensions are especially relevant for the comparative study of locational policies in SCCs. The vertical dimension encompasses contextual elements, national variations and institutional differences (Kübler and Paganao 2012). To capture the influence of higher-level governments is important because the different layers of government intersect much more profoundly in SCCs than in any other types of cites (Campbell 2000, p. 10). The local dimension is essential for understanding policy- making in economic policies, such as locational policies, because it accounts for the influence of private actors in urban governance arrangements (e.g. Stone 1989). 4 Phenomena to be explained: Locational Policies Agendas Locational policies aim

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